THE coronavirus pandemic could “significantly” slow Philippine economic growth this year before a strong rebound in 2021, the Asian Development Bank (ADB) said Friday, April 3, 2020.
The ADB said in its latest economic outlook that “expansionary fiscal and monetary policies” would partly offset slower domestic demand and disruptions in tourism, trade and manufacturing.
ADB projects the country’s gross domestic product (GDP) to only grow two percent in 2020 following the enhanced community quarantine measures imposed by the government to stop the spread of the Covid-19 in the country.
But ADB expects a strong recovery to 6.5 percent GDP growth in 2021, assuming that Covid-19 infections in the country are curbed by June this year.
“This unprecedented and extraordinary public health emergency brought about by the Covid-19 pandemic will substantially slow down economic growth this year, with most of the contraction in the economy occurring in the second quarter. We are anticipating a bounce back starting in the second half of this year, supported by the government’s stimulus spending and easier monetary policies,” said ADB country director for the Philippines Kelly Bird.
“ADB has been working closely with the Philippine government in its fight to ease the impact of the Covid-19 pandemic on Filipinos. We have provided two grants totaling US$8 million to assist the government and we are now in advanced stages of preparing a larger and comprehensive assistance to help alleviate the impacts of the pandemic on communities’ well-being and support fiscal stimulus,” he added.
Sustained public investment and a rebound in private consumption will drive economic growth in 2021, the ADB said.
The economy will also benefit from the government’s large-scale fiscal spending to boost the delivery of relief measures to vulnerable sectors affected by the pandemic.
Inflation is expected to reach 2.2 percent this year and 2.4 percent in 2021, with further downside pressure from lower global oil prices.
With inflation projected to remain within the central bank’s target range of two to four percent, authorities have room for further monetary policy expansion to cushion any lingering effects of the pandemic on the economy.